Commentary: Apple and the vertical transformation of mining – by Kurt Breede (Northern Miner – February 26, 2018)

The Northern Miner

Kurt Breede, P.Eng. is the Director of Industry Partnerships at the Lassonde Institute of Mining, University of Toronto, one of the leading mining research institutes in Canada. The views and opinions expressed in this article are those of the author.

Earlier this month, Bloomberg reported that Apple Inc. was in direct talks with an undisclosed mining company to secure long-term cobalt supplies to support the mounting demands of the company’s power hungry device lineup.

Cobalt, a hard, silver-grey metal once used for jewellery and paints, is the primary component for today’s lithium-ion batteries. Valued at over US$37 per lb. — an increase of 100% from just the year before — the metal is a coveted chalice for power hungry manufacturers seeking footholds in the ever narrowing space.

The potential deal would mark one of several negotiated by vertically integrated manufacturers (VIMs) in recent months to secure supplies of metals required to satisfy expanding production targets. BMW, Volkswagon and Samsung are just some of the industry giants rallying to align themselves with raw material producers.

This transformation will likely transition well beyond power-centric commodities into other non-renewable resources — metal or otherwise — and may inadvertently have positive consequences beyond increased shareholder value.

Firstly, metal commodity prices are notoriously fickle with cycles becoming increasingly sporadic, each cycle contracting and swelling in greater frequency and amplitude than the one before.

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